Addressing inequality of opportunity

LeRoy GoldmanThe Shadow Knows

Published: Sunday, March 10, 2013 at 4:30 a.m.

Last Modified: Friday, March 8, 2013 at 2:31 p.m.

At the end of World War II, America was at the front edge of something profound. A colossus was emerging — the American middle class. The GIs had come home, and millions of them, thanks to the GI Bill, were in school preparing for a new life and a good job. The baby boomer generation had just begun to boom. The nation was confident and exuberant.

Americans became accustomed to sustained economic growth. Sure, there were recessions along the way. But they typically were short-lived and, most importantly, not a deterrent to national prosperity and a better life for most Americans.

Presidents and members of Congress hooked their careers and their re-election campaigns to the rise of the middle class. It was a win-win scenario for all of them, especially the Democrats, who quickly figured out that they could win elections by frightening the middle class into believing the Republicans would dismantle programs like Medicare. It's a strategy that has worked for decades in large part because the GOP has never figured out how to counteract the demagoguery.

Today, however, it's hard to deny that the party's over. The signs and symptoms of economic stagnation and national decline are evident everywhere.

In the first decade of the 21st century, 45,000 factories and plants closed their doors. Since 2000, median family income has fallen 6 percent, and total wealth for the middle class has dropped 28 percent. Households in the wealthiest 1 percent of the U.S. population have 288 times the wealth of the average middle-class family.

Middle-class core values of work, fairness and optimism have been replaced with desperation and hopelessness.

Virtually all Americans are united in their belief that the government in Washington has failed them, while it serves itself. Both political parties in Washington, especially the Democrats, attempt to convince voters that their party is the champion of the middle class. They both lie. They both lack the courage and/or the brains to do what needs to be done. And therein lurks an opportunity for the rebirth of the moribund Republican Party.

I find that Republican opportunity in a most unusual place — the thinking of economist and Nobel laureate Joseph Stiglitz. Stiglitz was the chairman of the Council of Economic Advisors in the Clinton Administration. He's a professor at Columbia University and was named by Time magazine as one of the 100 most influential people in the world in 2011. I suspect he's a Democrat and a liberal. So what? Good ideas are good ideas. And God knows, the GOP needs good ideas.

Thomas Edsall, in a review of Stiglitz's book, "The Price of Inequality," calls it "the most comprehensive counterargument to both Democratic neoliberalism and Republican laissez-faire theories." Edsall argues in effect that Stiglitz offers a "defiant rejection" of the inevitability of the economic mess America finds itself in.

Imbedded in Stiglitz's thinking are ideas that would enable the Republican Party to not only offer viable policy alternatives to the Democrats but also to win national elections.

Stiglitz sees America as a land of inequality of opportunity, a yawing chasm between the 1 percent and everybody else. He argues that the U.S. has less equality of opportunity than most all industrialized nations. According to the Brookings Institution, only 58 percent of Americans born into the bottom fifth of income earners ever escape that category. Only 6 percent make it to the top. Economic mobility here is less than in most of Europe and all of Scandinavia.

The most important reason for the inequality of opportunity is education. Since 1980, the poor have grown poorer, the middle has stagnated, and the top did better and better. The achievement gap between rich and poor children at the turn of this century was 40 percent larger than it was 25 years earlier.

Stiglitz argues that our "cherished narrative of social and economic mobility is a myth." He believes we have both moral and economic interest to open access to better education for those in the middle and at the bottom. Doing so would spur innovation, make the economy more robust, increase job opportunity and result in higher incomes that would increase the tax base.

Stiglitz argues that those in the middle class have been hollowed out, making them unable to invest in their or their children's future. He argues that the middle class has become too weak to support the consumer spending that drives the economy's growth. Ninety-three percent of income growth in 2010 went to the top 1 percent of income earners.

For most Americans, their home has been their principal asset. But today many Americans now have negative net worth as their home prices have plummeted. In addition, student debt now is more than $1 trillion, can't be canceled by bankruptcy and exceeds credit-card debt.

What all of this means is that we need a new way to think about the ways in which all of these forces intersect. Stiglitz is suggesting that the fundamental problem we face is political — the oversized effect of moneyed interest on the legislative and regulatory processes. He believes those political forces can and should be changed. It's a political calculus that changes everything. That's what Joseph Stiglitz's thinking serves up on a silver platter for either party to exploit.

His thinking offers a way to reframe the sterile and deadlocked political debate in Washington. Were a Republican to bring it forward, the national political landscape would be altered overnight. When you give the American middle class a reason for hope that is real, you will win their vote.

The Shadow's not holding his breath, but Goldman can be reached at tks12no12@gmail.com.

<p>At the end of World War II, America was at the front edge of something profound. A colossus was emerging — the American middle class. The GIs had come home, and millions of them, thanks to the GI Bill, were in school preparing for a new life and a good job. The baby boomer generation had just begun to boom. The nation was confident and exuberant.</p><p>Americans became accustomed to sustained economic growth. Sure, there were recessions along the way. But they typically were short-lived and, most importantly, not a deterrent to national prosperity and a better life for most Americans.</p><p>Presidents and members of Congress hooked their careers and their re-election campaigns to the rise of the middle class. It was a win-win scenario for all of them, especially the Democrats, who quickly figured out that they could win elections by frightening the middle class into believing the Republicans would dismantle programs like Medicare. It's a strategy that has worked for decades in large part because the GOP has never figured out how to counteract the demagoguery.</p><p>Today, however, it's hard to deny that the party's over. The signs and symptoms of economic stagnation and national decline are evident everywhere.</p><p>In the first decade of the 21st century, 45,000 factories and plants closed their doors. Since 2000, median family income has fallen 6 percent, and total wealth for the middle class has dropped 28 percent. Households in the wealthiest 1 percent of the U.S. population have 288 times the wealth of the average middle-class family.</p><p>Middle-class core values of work, fairness and optimism have been replaced with desperation and hopelessness.</p><p>Virtually all Americans are united in their belief that the government in Washington has failed them, while it serves itself. Both political parties in Washington, especially the Democrats, attempt to convince voters that their party is the champion of the middle class. They both lie. They both lack the courage and/or the brains to do what needs to be done. And therein lurks an opportunity for the rebirth of the moribund Republican Party.</p><p>I find that Republican opportunity in a most unusual place — the thinking of economist and Nobel laureate Joseph Stiglitz. Stiglitz was the chairman of the Council of Economic Advisors in the Clinton Administration. He's a professor at Columbia University and was named by Time magazine as one of the 100 most influential people in the world in 2011. I suspect he's a Democrat and a liberal. So what? Good ideas are good ideas. And God knows, the GOP needs good ideas.</p><p>Thomas Edsall, in a review of Stiglitz's book, "The Price of Inequality," calls it "the most comprehensive counterargument to both Democratic neoliberalism and Republican laissez-faire theories." Edsall argues in effect that Stiglitz offers a "defiant rejection" of the inevitability of the economic mess America finds itself in.</p><p>Imbedded in Stiglitz's thinking are ideas that would enable the Republican Party to not only offer viable policy alternatives to the Democrats but also to win national elections.</p><p>Stiglitz sees America as a land of inequality of opportunity, a yawing chasm between the 1 percent and everybody else. He argues that the U.S. has less equality of opportunity than most all industrialized nations. According to the Brookings Institution, only 58 percent of Americans born into the bottom fifth of income earners ever escape that category. Only 6 percent make it to the top. Economic mobility here is less than in most of Europe and all of Scandinavia.</p><p>The most important reason for the inequality of opportunity is education. Since 1980, the poor have grown poorer, the middle has stagnated, and the top did better and better. The achievement gap between rich and poor children at the turn of this century was 40 percent larger than it was 25 years earlier.</p><p>Stiglitz argues that our "cherished narrative of social and economic mobility is a myth." He believes we have both moral and economic interest to open access to better education for those in the middle and at the bottom. Doing so would spur innovation, make the economy more robust, increase job opportunity and result in higher incomes that would increase the tax base.</p><p>Stiglitz argues that those in the middle class have been hollowed out, making them unable to invest in their or their children's future. He argues that the middle class has become too weak to support the consumer spending that drives the economy's growth. Ninety-three percent of income growth in 2010 went to the top 1 percent of income earners.</p><p>For most Americans, their home has been their principal asset. But today many Americans now have negative net worth as their home prices have plummeted. In addition, student debt now is more than $1 trillion, can't be canceled by bankruptcy and exceeds credit-card debt.</p><p>What all of this means is that we need a new way to think about the ways in which all of these forces intersect. Stiglitz is suggesting that the fundamental problem we face is political — the oversized effect of moneyed interest on the legislative and regulatory processes. He believes those political forces can and should be changed. It's a political calculus that changes everything. That's what Joseph Stiglitz's thinking serves up on a silver platter for either party to exploit.</p><p>His thinking offers a way to reframe the sterile and deadlocked political debate in Washington. Were a Republican to bring it forward, the national political landscape would be altered overnight. When you give the American middle class a reason for hope that is real, you will win their vote.</p><p>The Shadow's not holding his breath, but Goldman can be reached at tks12no12@gmail.com.</p>